Glossary

Velocity of Money

The velocity of money in economic sector; this is the method to measure the national income compared to the buying behavior by describing the relationship among money, purchase of goods and services; this is usually stated in a form of comparison between the gross national income and money available to purchase (money reserve); if there is an increase in the velocity, it means in average the money is controlled in a short time which shows the growth in money demand and general economic expansion; if there is a decrease in the velocity it means the money is not used very fast and the consumers prefer to save the money than to spend it; high velocity of money can also mean high consumer’s transactions.

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